future of smps: digital transformation
TRANSCRIPT
Future of SMPs: Digital Transformation Webinar, 4 March 2021
Future of SMPs: Digital Transformation
• Please keep your video off and mike on mute• Please select your language preference (German channel has
Georgian translation) • Please be prepared to answer a few short questions• Please type any questions you have into the message chat, stating
who you are and from which organisation• Please note that the event will be recorded
Housekeeping
Martin de Bie
Advisor, New Technology & Cross Industry Innovation and Chair, EFAA Digital Working Group
Paul Thompson
Director, EFAA for SMEs and World Bank Consultant
Presenters
• Opening Remarks (5 minutes)
• Practice Transformation – Paul Thompson (10 minutes)
• How to Digitalize Your Practice – Martin de Bie (45 minutes)
• SMP Pacesetters Embracing Technology – Paul Thompson (10 minutes)
• Questions and Answers (Q&A) (15 minutes)
• Closing Remarks (5 minutes)
• Reading
Agenda
• More than ever before the SMP (Small and Medium Sized Practice) is the trusted adviser to smaller businesses, and the Covid-19 crisis is a call to arms for smaller accountancy firms to transform further. Digital transformation of SMPs is key to accelerating the pace of change, ensuring durability, and driving better understanding of client needs.”
• “The pandemic has, in fact, accelerated digital adoption in areas such as e-commerce (for reaching clients) and remote working (for reaching staff) that relate directly to maintaining operations.”
COVID-19 - the SMP's road to recovery, ACCA
Opening Remarks
Page 6
Practice Transformation Action Plan – A Road Map to the Future
• Embrace Change• Leverage Technology• Focus on Talent Management• Evolve the Firm Operating Model and Build
Advisory Services Practice Transformation Action Plan – A Roadmap to the Future
Practice Transformation – Introduction
Page 7
Practice Transformation - Adopt & Embed Technology I
1. Conduct an Environmental Scan
2. Align with the Long-Term Strategy & Formulate a Realistic Implementation Plan
3. Adopt the Cloud
4. Involve Clients in Technology Decisions
5. Identify and Support an Internal Technology Champion
Page 8
Practice Transformation - Leverage Technology I• Embracing technology critical to
– Improve practice efficiencies– Enhance service delivery– Motivate staff – Expand services
• Requires– Continuous investment– Discussion with other firms and clients– Cloud technology
Page 9
Practice Transformation - Leverage Technology II• Successful adoption &
implementation involves– A coordinated approach and strategic
plan– Internal champions– Procedures being designed and
enforced– Ongoing training for staff at all levels
mjcdebie.eu
Digital Transformation Isn’t Easy It’s a Strategy
Source https://www.amazon.com/Digital-Firm-change-accounting-competitive-ebook/dp/B07D4R7M6H
Digital Strategy is a Well Thought Process
Source https://www.bcg.com/publications/2019/five-rules-digital-strategy
Source: Simon Sinek, Inc.
The unprecedented disruption by COVID-19 is accelerating the urgency for agility, adaptability and transformation. Industry structures and business models are being disrupted – and the digitalization of the economy is being rapidly accelerated.
An estimated 70% of new value created in the economy over the next decade will be based on digitally enabled platform business models.
Why SMPs Need to Move to Digitized Services
Sources: https://www.weforum.org/platforms/shaping-the-future-of-digital-economy-and-new-value-creation and https://www.equinix.nl/gxi-report/#:~:text=The%20GXI%20predicts%20interconnection%20bandwidth,the%20overall%20economy%20slows%20down.
Data Driven Approach
Source: 216 Accountants
Compliance is now about speed, accuracy, and competitive pricing. But what clients really value are relationships, analysis, and advisory services. These things come from insights derived from real-time data – insights that can enable real business change.
To ensure an optimal client experience offer a standard work process composed of the following best-of-breed software solutions which integrate seamlessly with each other.
Focus on real-time data. It gives you visibility and access to all the financial information you need to complete compliance and deliver advisory services efficiently and accurately.You can see everything with all historical and current client data from multiple sources stored in one location. Nothing goes unnoticed.
Real-time and automatic updates from your clients’ systems ensure information is always up to date. Standardizing this data into a common chart of accounts, and a single data store, also makes automation possible.
Steps to Data Driven Services
Source: https://www.silverfin.com/resources/4-steps-to-take-for-a-successful-digital-transformation-of-your-accounting-firm
Growth Opportunities
• Entrepreneurs really need an advisor and a listening ear. Accountants must focus on this and invest more in emotional and social skills.
• IT and data skills are becoming more important to be a good business advisor. Accountants must be able to interpret data and convert it into powerful and relevant advice.
• Companies need to look ahead instead of backwards. The accountant must give instructions to the entrepreneur to keep his business running smoothly financially and technically.
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New client acquisition
Increased advisory revenue
Margin-lifting efficiencies
Improving client retention
Source: Botkeeper & 216
What is the Biggest Bottleneck for Growth?
Source: Botkeeper & 216
Accounting is the largest BOTTLENECK for scale & growth
CapacityProcessing the accounting takes a lot of time,
which is at the expense of customer contact and acquisition
Attracting talentDifficult to find qualified personnel to grow
customer base
Right people, wrong tasksAccountants who have to focus on providing advice are too concerned with accounting
Reliability and timelinessPoor quality and late delivery does not provide a good basis for advice
Trending: Bookkeeping will be Robotized
Source https://www.botkeeper.com/
Prominent Investor…
Source https://www.bizjournals.com/boston/news/2018/11/26/ai-bookkeeping-startup-botkeeper-raises-18m-round.html
Robotic is Machine Learning & Standardization
AdvantagesUse of RCSFI helps accountants improve service delivery to their clients: Administering accounts is more efficient since all accounts are referenced to a standard classification. Compilation of reports is more efficient due to the connection
between the RCSFI and SBR Better insight: standardization allows for improved data exchange between systems Improved financial analysis through comparable data. Standardization also provides opportunities for government agencies to reciprocate data exchange by
providing aggregate data Improved quality of financial accounts by connecting the general ledger with other systems in the financial administration (such as e-invoicing, salary administration
and point of sale systems).
Introducing Reference Classification System of Financial Information (RCSFI)
Source: https://referentiegrootboekschema.nl/english
How Does RCSFI Work in Practice?
Reference Code Description Ledger Company A Ledger Company B
BVrd Stocks 12400 3000
BVrdHan Trading goods 12410 3200
BLimKasKas Cash 10010 2000
WOmzGrpGr1 Sales 80000 8500
Source: https://www.boekhoudplaza.nl/cmm/rgs/referentiegrootboekschema_rgs_balans_winst_en_verlies.php
Table 1: Example of the Reference Classification System of Financial Information (RCSFI)
Dutch GAAP and RCSFI
Source: https://www.boekhoudplaza.nl/cmm/rgs/referentiegrootboekschema_rgs_balans_winst_en_verlies.php
SMPs Have a Key Role in Financial Data Chain
The main objective of the Early Warning Europe project was to create strong framework conditions for entrepreneurs that can help them face key challenges, including managing a crisis, dealing with bankruptcy and getting a second chance.
Source: https://atradius.nl/rapport/economic-research-2020-insolvencies-forecast-to-jump-due-to-covid-19.html#
SMPs Need to Look Ahead Instead of Backwards
How SMEs Think of SMPs on Digitalization Topic
Digital Competency Rating
Why is Digital Competence Important?Digitalisation has profound implications for small- and medium-sized accountancy practices (SMPs). These implications will demand change. New digital technologies will continue to emerge. SMPs must anticipate these changes and be prepared to respond. SMPs, however, are typically resource constrained and in need of guidance and direction on how best to respond to these implications. This is where the Digital Competency Maturity Model (DCMM™) comes in.
What is the Digital Competency Maturity Model (DCMM™)?The DCMM™ comprises a questionnaire that enables SMPs to rate their current level of maturity on digital competency, identify areas where competencies are strong or lacking, and then develop a road map for achieving a higher level of maturity.
Source: https://www.efaa.com/dcmm/digital-competency-rating.html
Introduction [ARTICLE]
Alex Falcon Huerta [VIDEO]
Nigel Adams and Nikki Adams [VIDEO]
SMP Pacesetters Embracing Technology
Questions and Answers (Q&A)Note – we are happy to receive after the webinar via email to [email protected] and / or
SMPs are recommended to
• Make digital transformation a high priority – disrupt yourselves or be disrupted
• Digital transformation equates to mindset, skillset and toolset
• Read IFAC’s ‘Practice Transformation Action Plan – A Roadmap to the Future’ and leverage technology using steps outlined
• Accelerate digital adoption including the following: community technologies such as social media and messaging; ‘next-generation’ computing such as Cloud, Serverless and Edge; and data technologies such as big data, analytics, and visualisation
• Consider using the DCMM™, compare scores with the averages in report here and summary article here, and then prepare a plan for change
Closing Remarks
• Survey of Auditors and Audit Firms on the Impact of the COVID-19 Pandemic on the
Market for Audit Services in Georgia, World Bank / EU / SARAS
• COVID-19 - the SMP's road to recovery, ACCA
• Practice Transformation Action Plan – A Roadmap to the Future, IFAC
• Why SMPs must embrace the potential of digitalisation, ACCA
• How PAOs Can Help SMPs Transform their Businesses with Minimal Cost and Pain, IFAC
• Quick Guide to Digitalisation and Business Diversification for SMPs, ACCA
• SMP Pacesetters Embracing Technology (Article & Videos), ACCA
Reading (Georgian unless stated otherwise)
EFAA Secretariat
The European Federation of Accountants and Auditors for SMEs
4 Rue Jacques de Lalaing, B - 1040 Brussels, Belgium
T +32 2 736 88 86
F + 32 2 736 29 64
Website www.efaa.com
Twitter @EFAAforSMEs
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